Taiwan has the world's 16th highest gross domestic
product (GDP). GDP increased by three per cent in 2018. GDP
per capita amounts to USD 25,530 (2019). In East Asia and
Southeast Asia, only Singapore, Brunei, Japan and South
Korea have a higher GDP per capita. Unemployment is 3.8 per
countryaah, Taiwan was created in 1949 after the communist victory in
the civil war on the mainland (China). Since 1950, Taiwan
has experienced an almost explosive economic development,
and has changed from a laid-back agricultural community to
an industrialized country with significant commodity
exports. Industrial production has been the most important
driver of the economy.
Economic developments are closely linked to close
political and economic relations with the United States
before 1972, close economic relations with Japan and growing
economic and cultural relations with China after 1987.
From 1950, Taiwan (along with South Korea, among others)
was perceived by the United States as the front line area
against Communist China. Under considerable American
influence, intensive, state-controlled development
strategies were implemented, with remarkable growth as a
result. Taiwan, along with South Korea, Hong Kong and
Singapore, were referred to as the newly industrialized
economies or the "four tigers".
Unlike South Korea, Taiwan never developed large
commercial and industrial conglomerates. The main part of
the business structure has instead consisted of small and
medium-sized family businesses, including large state
monopoly companies, including energy supply, petroleum
industry and telecommunications. The strong state control of
the economy was first reduced in the 1990s through the
beginning liberalization of import trade, banking and
financial services and other service industries.
Thanks to a solid economy and large foreign exchange
reserves, Taiwan was relatively well-rested through the
great Asian financial crisis of 1997-1998. To counter
diplomatic isolation, Taiwan has used parts of its foreign
exchange reserves to provide politically motivated
assistance to particular Caribbean and Central American
countries with which it has diplomatic relations. (In 2019,
Taiwan had diplomatic relations with 14 countries of the UN
member states and the Vatican).
Despite the foreign policy isolation, Taiwan's foreign
trade has increased significantly. With only 21 million
inhabitants, Taiwan consolidated its position as one of the
world's foremost trading nations in the 1990s. In 1995,
foreign trade was $ 215 billion, and both imports and
exports passed $ 100 billion for the first time. In 2005,
foreign trade totaled $ 350 billion. Only at the turn of the
millennium was Taiwan overtaken by China as a trading
Relationship with China
Chiang Ching-kuo, son of China's President Chiang
Kai-shek, became prime minister in 1972. Upon his father's
death in 1975, he took over as leader of Kuomintang and was
elected president in 1978. Until his death in 1988, he
gradually changed the strictly authoritarian form of
government, and the one-party system was broken in 1986. At
the election that year, the Democratic Progressive Party
(DPP) gained a quarter of the vote and established itself as
the leading opposition party. DPP's slogan has been "one
China, one Taiwan", ie an independent Taiwan and no to
reunite with China. The DPP, which led a minority government
from 2000 to 2008, has traditionally been concerned that
economic cooperation with China would make the country too
dependent on the Chinese market and thus vulnerable to
political pressure. Nevertheless, there was a strong
increase in trade with China between 2000 and 2008. In 2000,
exports to China accounted for only 2.9 per cent of Taiwan's
total exports, while in 2006 it reached 23.2 per cent.
At the 2008 parliamentary elections, Kuomintang gained
power and switched to a more conciliatory and cooperative
course in Beijing. As a result, investors got freer rein.
Taiwanese companies were increasingly focusing on products
for the growing Chinese middle class.
The primary contributions contribute 1.8 per cent of the
country's GDP and employ 4.9 per cent of the working
Intensive cultivation of rice and sugar cane, partly on
large plantations, was organized under the Japanese rule to
supply the Japanese domestic market. During the period
1949–1953, the Kuomintang government, with support and
pressure from the United States, implemented land reform,
which contributed to the fact that small family farms are
now the most common form of operation.
Agriculture is completely dependent on fertilizers due to
the monoculture of old times on a soil which is poor in
nature. About a quarter of the land area is cultivated, of
which about half is used for wet rice production, often in
rotation with other crops. Rice cultivation is heavily
subsidized, but production is still declining. Rice is the
main ingredient in the diet and is grown in most places. In
slightly higher areas, barley, wheat soybeans and sorghum
are grown. Sugarcane is grown on Taichungsletta and
Since the 1980s, horticulture has developed rapidly. A
variety of fruits are grown, with pineapple and mango as the
most common, and a large variety of vegetables.
Pig is a leader in animal husbandry, followed by cattle
and sheep. Of poultry, most hens are kept, followed by ducks
and geese. Since the mid-1960s, animal husbandry has
gradually been transferred to large industrial farms, and
meat is produced for export.
The forest covers about half of the land area and covers
mostly mountain terrain. It is therefore partially
inaccessible for commercial exploitation. Important tree
species are bamboo, teak and various pine species. The
authorities have focused mainly on the conservation of the
forest since the 1980s, and the harvesting is therefore
Since the 1960s, Taiwan has built up a large ocean-going
fishing fleet, which includes 21,974 fishing vessels (2017).
The previously important coastal fishery now has little
economic significance, partly as a result of industrial
pollution of the coastal waters. The total catch of seafood
amounts to 748,000 tonnes (2017). Important fishing ports
are Chilung, Kaohsiung, Suao and Makung. On the island of
Taiwan, there are a total of 90,000 smaller fish farms.
Mineral resources are generally small. The deposits of
coal, oil and natural gas are small and of little economic
value. Otherwise, sea salt is recovered along the west
coast, as well as some sulfur, marble, limestone and
Hydropower resources are estimated at around 5 GW, of
which 4.68 GW has been developed (figures from 2016). With
the small domestic energy sources, the energy supply is
entirely dependent on imported raw material. Taiwan has two
nuclear power plants in operation, which contribute about 15
percent of the country's power generation. Construction of a
new nuclear power plant began in 1999, but was temporarily
halted in 2000 due to environmental considerations. More
than three-quarters of energy production takes place in the
south, making the energy supply to the north vulnerable to
The industry contributes 36 per cent of the country's GDP
and employs 35.9 per cent of the working population.
Modern industrial development began in the 1950s when the
authorities, with considerable American help and advice,
initiated an import substitution policy. The purpose was to
build up a separate industry for the production of lighter
consumer goods for the domestic market by means of strong
restrictions on imports. Through clearly defined objectives,
the authorities controlled access to credits, raw materials,
equipment and manpower.
In the 1960s, the policy was changed to export-oriented,
and Taiwan began to take an active part in the world
economy. Foreign investment (from the US, Japan and overseas
Chinese) was attracted by cheap, disciplined and
well-educated labor. Export-oriented zones were created in
several places. In particular, the textile industry and the
production of electrical household appliances were expanded.
At the same time, the strong protection of the domestic
market was maintained.
From the mid-1970s to the 1980s, the industrial structure
was gradually adjusted to a greater focus on the heavy
industry. Major development projects were initiated and
included iron and steel mills, petroleum refining,
petrochemical industry and production of machinery and
equipment, besides strong expansion of the energy supply and
Throughout the 1990s, the production of high-tech
information products evolved to become a new economic
mainstay. Many companies have evolved from merely being
producers for foreign clients to developing their own
world-leading products themselves. The labor-intensive part
of production was moved to China and other countries, while
most of the high-tech operations were retained.
Taiwan is now one of the world's largest manufacturers of
hardware (software), software (software), display terminals,
motherboards and more. Other important industrial products
are chemicals, textiles, iron and steel, machinery, cement,
motor vehicles and motor vehicle parts, as well as
pharmaceutical products. The high-tech industry is
particularly concentrated on a high-tech industrial park,
which was opened at Hsinchu in 1980, and later expanded
several times. New high-tech industrial parks were later
opened at Tainan and Taichung.
In the period from 2008 to 2018, the number of tourists
increased from 3.85 to 11.07 million. This represented an
increase of just over 200 per cent. In 2015, 5.7 million
tourists came from China, including Hong Kong and Macao, 1.6
million from Japan and 700,000 from South Korea.
Transport and Communications
The total road network is 43,206 kilometers, of which
42,793 kilometers with a fixed tire. Highways on the west
coast of the island connect Taipei in the north with
Kaohsiung in the south. It is also a freeway that connects
the west coast with the east coast. The railway network
covering 1692 kilometers (2018) provides a continuous
connection around the island. There is a high-speed railway
between Nangang, Taipei and Kaohsiung.
The island of Taiwan has three international airports:
Taoyuan near Taipei, as well as Kaohsiung and Taichung
airports. Kaohsiung has the country's largest port. Other
major ports are Chilung and Taichung.
Taiwan's strategic location in East Asia and the
country's technical and financial resources have resulted in
several international freight companies having their
regional headquarters in Taiwan. The world's eighth largest
container shipping company is Taiwanese, and a number of
international aircraft manufacturers have been established
In 2017, Taiwan's exports amounted to USD 349.8 billion,
while imports amounted to USD 259.0 billion. With this, the
country had a foreign trade surplus of 90.8 billion US
The most important export products are petrochemical
products, motor vehicles and motor vehicle parts, ships,
communication equipment, electronics and computer equipment.
The five main markets for Taiwan's exports are: China (28.8
percent), Hong Kong (12.4 percent), the United States (11.8
percent), Japan (6.9 percent) and Singapore (5.2 percent).
The main import products are oil, gas, coal, steel, motor
vehicles, chemicals, machinery, equipment products,
ingredients for the plastics and clothing industry and
textiles. The main markets for Taiwan's imports are: China
(19.3 percent), Japan (16.2 percent), ASEAN countries (12.0
percent), the United States (11.7 percent) and EU countries
Taiwan's strong economic growth is largely due to the
country's competitiveness and growth in the export market.
Wholesale trade completely overshadows trade in services
(shipping, transport and tourism) abroad. On the other hand,
the lack of natural resources and a relatively small
domestic market make Taiwan dependent on foreign trade.
Large foreign trade surpluses since the 1970s have led
Taiwan to be among the ten countries in the world with the
largest foreign exchange reserves (2019). Since the
beginning of the 1990s, Taiwan has gradually opened its
economy by reducing tariffs and facilitating access to a
wider range of foreign imports.
Taiwanese capital makes twice as much foreign direct
investment (mostly to China, followed by Southeast Asia and
the United States) as the country receives. The largest
investors in Taiwan are Japan and the United States. Taiwan
receives no financial aid from abroad. The country itself
only contributes with insignificant development assistance,
mainly to the few countries that still have diplomatic
relations with Taiwan.